UPDATE 1-Barclays Capital cuts Apple price target

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Oct 3 (Reuters) - Barclays Capital cut its price target on Apple Inc (AAPL.O: Quote, Profile, Research, Stock Buzz) shares and lowered its estimates through fiscal year 2010, citing economic weakness, worries in the personal computer supply chain and prospects for subdued demand over the long term.

The brokerage slashed its price target on the stock by $45 to $135.

However, Barclays maintained its "overweight" rating on the stock, saying valuation at these levels is compelling given about $25 per share in cash and prospects for well over $9 per share in free cash flow in fiscal year 2009.

Barclays reduced its fourth-quarter Mac and iPod unit estimates. It raised its iPhone unit estimates to 5 million from 3.8 million and upped gross margin estimates due to better-than-expected component costs in the quarter.

For the fourth quarter, the brokerage lowered earnings per share estimates by a penny to $1.11.

For fiscal 2009, Barclays expects earnings of $5.55 per share, down from its previous forecast of $6.05 a share. It also cut fiscal 2010 earnings estimates to $6.80 per share from $7.25 a share.

Apple shares were up more than 4 percent at $104.60 in morning trade Friday on Nasdaq. (Reporting by Sandhya Menon in Bangalore; Editing by Gopakumar Warrier)